China's EV stocks fall as BYD reports weak January sales

BYD, China’s leading EV manufacturer, experienced a stock drop in Hong Kong on February 2 after reporting a 30% fall in January sales year-on-year, signaling a slowdown in demand.

Shares fell as much as 5.1%, the largest intraday decrease in three months, with other Chinese EV firms like Xpeng and Nio also dropping over 6% following their own sales reports.

The sector overall declined, with Geely also down 2.6%, despite outselling BYD last month.

The sales slowdown is linked to a post-December drop in demand after the expiration of green-car subsidies and the impact of a new 5% EV purchase tax.

While BYD aims to increase international deliveries by nearly 25% to 1.3 million units in 2026, its overseas shipments fell 25% in January, likely due to front-loading of orders, according to Morgan Stanley analyst Tim Hsiao.

Analysts expect total sales to reach over 5 million units this year, up from 4.6 million in 2025.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

The January sales drop signals a broader market shock

Retail sales data from the China Passenger Car Association (CPCA), cited by Vision Times, found that in the first 11 days of January 2026, retail sales of new energy passenger vehicles fell 38% year-on-year. NEVs’ (new energy vehicles) share slid to 35.5% from nearly 60% at the end of 2025 1.
Industry insiders in China describe a “suicide-style” price war, with more than 70 models marked down since the new year began 1.
Estimates cited by Vision Times put China’s 2025 auto output about 3 million vehicles above effective demand, which suggests chronic oversupply 1.
Vision Times reports average vehicle prices fell 15% year-on-year. Some models’ gross margins sank below 5% 1.

China’s domestic slowdown could sharpen overseas rivalry and speed up higher-tech work at home

Weaker demand in China is pushing electric carmakers to chase overseas growth, where margins are often higher 2.
At a media briefing, Li Yunfei, general manager of BYD’s brand and public relations division, said BYD is aiming for 1.3 million vehicle deliveries outside China in 2026. That would be about 25% above 1.05 million last year 3.
BYD is also building more capacity abroad, including a new Hungary plant expected to ramp up manufacturing in 2026 2.
Wood Mackenzie (an energy and commodities research firm) expects 2026 policy and subsidy changes, including price-floor regulation, to steer automakers toward bringing advanced technologies such as solid-state batteries to market. The goal is to prove value instead of leaning on small upgrades 4.